I THINK I'M FINALLY READY!!!

[mommyof4]

Well it has been a long journey for us, but I think I might be where I want to be. My scores are 674 Ex, 670 Tu, and 677 ( that one I got USAA and I know it's a fako). I have a paid collection in the amount 346.00 from 5 years ago. I haven't been late in anything for over 5 years. My husband 684 Tu, 627 Ex ( do to a paid collection reporting a 120 late, which is impossible if it's a collection account). He has three paid collections, most recent one 3 years ago. Our Income is 9300 a month and our monthly debt is 910 (excluding rent). We both have been with our current companies for well over 12 years each. We have 15,000 for down payment. I want to go through FHA for loan.

So I took a shot and filled out the pre-qualification through Wells Fargo, but I'm so scared after reading how hard the banks can be these days. I feel like I have come a long way and would hate to have my dreams shattered at the stroke of a pen. So I have so many questions and concerns.

1. Do you think we're ready from the basic information I provided?

2. How likely are we to get approved for FHA?

3. Do anyone have any experience with Wells Fargo?

4. I know they have First Time Home Buyers Assistance Programs, How likely is that we can get in on that? ( I live in California)

I have learned and continue to learn so much from this site. Thank You so much for all the help I received.

[mauve]

Sounds like you have some high revolving debt, actually.  You'll get big score boosts if you pay it down.  That's not going to have much impact on an FHA rate, though.

You'll want to figure out how much house you feel that you can afford.  Conservatively, you want to spend no more than 28% of your gross income on your house payment + insurance + property taxes.  (front end ratio) and 36% of your gross income on front end + debt payments. So since you're spending 910/mo in debt payments, you're moving the line for house affordability down by about $200/mo.  However, depending on how much house you are planning to buy, you could be fine. 

You may also want to consider saving up some reserves - like 6 months of expenses. 

http://cgi.money.cnn.com/tools/houseafford/houseafford.html

Keep in mind that closing costs can be significant, too.  Figure those out before you put in an offer - you're not going to want to be surprised by something like being unable to put the amount down you intended because you didn't figure in closing costs. 

[mommyof4]

Thanks for the response. Actually my debt is actually conservative considering its for 2 cars and on two credit cards my income is 52000 a yr and his 65000 with overtime included, but I also receive 1000 a month from court ordered child support ( which I choose not to include in the loan).

[mauve]

If you paid off the credit cards, your scores would jump.  Ideally, you want to have less than half of your credit cards reporting a balance (best: down to 1 card reporting a balance), and that one card reporting a less than 9% balance.  How conservative it is or isn't is going to be determined by how much you're ending up spending on a house / interest rate / homeowner's insurance / property taxes.  

[mommyof4]

What I was meaning is my score won't jump if I pay off my credit cards becasue they're just showing a balance of 550 between them both ( which is just about 6 % utl)The debt is the 2 car notes we have.

[mauve]

OH

OK, nevermind.  I thought you meant something else when you said that those items were your only debt.  I'd still pay one of them to $0, though - you won't see a huge jump, but you should see a jump.